The Central Bank of Nigeria (CBN) has issued a draft of revised Regulatory and Supervisory Guidelines for all Bureau de Change (BDC) Operators and stakeholders in the financial services industry.

The guidelines, which seek to enhance the regulatory framework for BDC operations as part of ongoing reforms of the Nigerian foreign exchange market, were contained in a circular released yesterday, Friday, February 23, 2024.

The circular signed by Haruna Mustafa, Director, Financial Policy and Regulation Department of the CBN had the 50 paged guidelines attached.

The guidelines spelt out activities allowed, licensing requirements, corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism provisions for BDCs.

The draft document on the CBN’s website also listed new record-keeping and reporting requirements, corporate governance requirements, financial requirements, among others.

Under the minimum capital requirements, the central bank is introducing a two-tier license for BDC operators in the country.

The guidelines read, “A Tier 1 BDC is authorised to operate on a national basis can open branches and may appoint franchisees, subject to the approval of the CBN.

“A Tier 1 BDC (which is the franchisor) shall exercise supervisory oversight over its franchisees. All franchisees shall adopt their franchisor’s name, branding, technology platform, and rendition requirements.

“Also, a Tier 2 BDC is authorised to operate only in one state or the FCT. It may have up to three locations – a head office and two branches, subject to approval of the CBN. It is not permitted to appoint franchisees.”

“Under Tier 1, operators are expected to have N2bn as minimum share capital while also depositing a Mandatory Caution Deposit of N200m.

“The application and licence fee is also N1 million and N5 million respectively.

“Under Tier 2, operators are expected to have N500 million as minimum share capital while depositing a Mandatory Caution Deposit of N50 million. The application and licence fee are also N250,000 and N2 million respectively.”

“Pursuant to the powers conferred under Section 56 of the Banks and Other Financial Institutions Act, 2020 (BOFIA), the Central Bank of Nigeria (CBN) hereby issues this draft revised Regulatory and Supervisory Guidelines for Bureau de Change (BDC) Operations in Nigeria for stakeholder comments and/or inputs.

“The Guidelines significantly enhances the regulatory framework for the operations of Bureau De Change as part of ongoing reforms of the Nigerian foreign exchange market.

“The Guidelines revises the permissible activities, licensing requirements, corporate governance and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) provisions for BDCs.

“It also sets out new record-keeping and reporting requirements, among others,” the circular said.

Mustafa said the draft guidelines were available on the CBN’s website, www.cbn.gov.ng.

He urged stakeholders to forward their comments to the Director, Financial Policy and Regulation Department, CBN, Abuja with soft copies mailed to PolicyandRegulationDivision@cbn.gov.ng by March 4, 2024.

The News Agency of Nigeria (NAN) reports that some portions of the 50 paged draft document targeted transparency, elimination of corruption and hoarding of Forex.

It gave reasons for preservation of records and conditions for revocation of BDC operations licence.

“Every BDC shall maintain documents obtained from its customers for at least five years after the consummation of the transaction,” draft item 18.0 in the schedule noted.

It said the CBN may revoke the license of a BDC: where the operator or its entities forges, mutilates, alters or defaces any foreign currency, or other fx instruments with intent to defraud.

The document also prohibited multiple ownership of BDCs; obtaining foreign currency from ineligible sources or from eligible ones in a fraudulent manner.

It also spelt out sanctions for other regulatory infractions. (Largely based on a NAN report)

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